I want to how does a life insurance trust work? Thanks for any sort of help regarding this.
Total Comments: 8
Posted: Mon Oct 31, 2011 06:47 am Post Subject:
A life insurance trust also known as irrevocable life insurance trust, works by naming a trustee to take over ownership of the life insurance policy upon the owner’s death.
life insurance trust lets you reduce or even eliminate estate taxes, so more of your estate can go to your loved ones.
Posted: Mon Oct 31, 2011 11:31 am Post Subject:
Mona, please do not guess at answers.
Posted: Mon Oct 31, 2011 03:32 pm Post Subject:
Monawayne, do you know what is incorrect about your answer?
Posted: Wed Nov 02, 2011 12:54 pm Post Subject:
I have to agree with fdsa on this one. Mona's answer is incorrect on at least one count. I'll wait a couple of days to see if she answers the question before I do. But part of her answer is also correct.
Posted: Sun Nov 27, 2011 06:29 am Post Subject:
Need more info, are you referring to a revocable or irrevocable trust?
Posted: Sun Nov 27, 2011 09:34 am Post Subject:
TaxFree . . .
There would be no benefit to placing life insurance inside a REVOCABLE trust. The whole purpose of the IRREVOCABLE trust (ILIT) is to demonstrate to the IRS that the original owner-insured (or applicant-insured if the ILIT is the original owner) has relinquished all INCIDENTS OF OWNERSHIP (including the right to name beneficiaries or take policy loans) of the contract so that its value will not be includable in his estate following death.
Now, back to monawayne's incorrect statement about "naming a trustee to take over ownership of the policy". The trustee is simply the servant of the trust, a living breathing human being who has authority to act as the signatory on behalf of the trust, and to exercise fiduciary responsibility on behalf of the beneficiaries of the trust.
The TRUST would be the owner and the irrevocable beneficiary of the policy, and the trustee would be empowered to exercise the insurance contractual "rights of ownership" -- such as paying premiums, filing death claims, and, possibly, taking loans against cash value (but only for the direct benefit of the trust beneficiary(ies)).
The trustee would never be named as (a) the owner of the policy or (b) the beneficiary of the policy.
Posted: Mon Oct 31, 2011 06:47 am Post Subject:
A life insurance trust also known as irrevocable life insurance trust, works by naming a trustee to take over ownership of the life insurance policy upon the owner’s death.
life insurance trust lets you reduce or even eliminate estate taxes, so more of your estate can go to your loved ones.
Posted: Mon Oct 31, 2011 11:31 am Post Subject:
Mona, please do not guess at answers.
Posted: Mon Oct 31, 2011 03:32 pm Post Subject:
Monawayne, do you know what is incorrect about your answer?
Posted: Wed Nov 02, 2011 12:54 pm Post Subject:
I have to agree with fdsa on this one. Mona's answer is incorrect on at least one count. I'll wait a couple of days to see if she answers the question before I do. But part of her answer is also correct.
Posted: Sun Nov 27, 2011 06:29 am Post Subject:
Need more info, are you referring to a revocable or irrevocable trust?
Posted: Sun Nov 27, 2011 09:34 am Post Subject:
TaxFree . . .
There would be no benefit to placing life insurance inside a REVOCABLE trust. The whole purpose of the IRREVOCABLE trust (ILIT) is to demonstrate to the IRS that the original owner-insured (or applicant-insured if the ILIT is the original owner) has relinquished all INCIDENTS OF OWNERSHIP (including the right to name beneficiaries or take policy loans) of the contract so that its value will not be includable in his estate following death.
Now, back to monawayne's incorrect statement about "naming a trustee to take over ownership of the policy". The trustee is simply the servant of the trust, a living breathing human being who has authority to act as the signatory on behalf of the trust, and to exercise fiduciary responsibility on behalf of the beneficiaries of the trust.
The TRUST would be the owner and the irrevocable beneficiary of the policy, and the trustee would be empowered to exercise the insurance contractual "rights of ownership" -- such as paying premiums, filing death claims, and, possibly, taking loans against cash value (but only for the direct benefit of the trust beneficiary(ies)).
The trustee would never be named as (a) the owner of the policy or (b) the beneficiary of the policy.
Posted: Sun Nov 27, 2011 09:19 pm Post Subject:
That is true, my bad
Posted: Mon Nov 28, 2011 09:59 am Post Subject:
I figured you knew that.
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